Telematics and cloud computing : their effects on underwriting considerations in the Maltese motor insurance market

Abstract

Information Technology has allowed many different industries to improve productivity and also become more efficient. Firms now perform tasks that before couldn't be done or else would require a longer time period to be completed. Service providers such as Insurance companies have made use of this phenomenon, however the extent to which this was used is limited. Information Technology allows data to be collected from numerous sources and with the proper means this can be then turned into information. This information can be then used to allow the companies to be run in a more profitable and be able to adapt to change in a more meaningful way. The aim of this study is to introduce telematics and cloud computing in the insurance industry with an emphasis on the Maltese Motor Insurance Market. The current methods of calculating motor insurance premium are quite antiquated and therefore the abovementioned capabilities will allow underwriters to have a more real time calculation. When using Telematics, the insurer will collect data about policyholders that will then allow them to calculate a premium that reflects the risk at hand. For example, the average speed will be recorded and if these prove to be of a higher risk the premium will be loaded accordingly. In addition to this, through the use of the latest Cloud Computing technologies available, this information will then be shared instantly and iv simultaneously throughout the insurer's databases. When sharing this data, the insurer is able to have constantly updated databases, which will then allow its underwriters to know the required information about each individual policyholder. This will then allow underwriters and decision makers within the insurance company to make the right decisions when quoting a premium. This study thus finds a relationship between the above mentioned IT technicalities and the local insurance industry, with the result being a more accurate and modern method of calculating Motor Insurance premium.